Car Insurance Rates Draw Fire In Illinois

January 10, 1989|By Laurie Cohen.

Consumer groups in Illinois and across the United States are stepping up their crusade against auto insurers.

Washington-based Citizen Action plans to launch a 14-state campaign Tuesday attacking high auto insurance premiums. One of the states is Illinois, where Citizen Action`s local affiliate, the Illinois Public Action Council, issued a study Monday aimed at showing that such premiums nationwide have risen much faster than some of the underlying costs, such as medical care.

Citizen Action also said it will renew its push in Congress for repeal of the insurance industry`s exemption from federal antitrust laws. Critics say the exemption restricts competition and leads to higher premiums; the industry denies those charges and says the exemption is needed to help small companies set rates.

The activity comes after California voters approved last year a measure to roll back rates for most property-casualty insurance, including auto insurance, 20 percent below November, 1987, levels. Insurers challenged the plan, and it is being reviewed by the state`s supreme court.

The California measure, Proposition 103, has given consumer groups ``an added boost of momentum,`` said Robert Kozarsky, a spokesman for Citizen Action.

The Illinois group last month called for a 15 percent cut in Illinois property-casualty rates, state approval for rate increases of more than 10 percent, an elimination of state antitrust exemptions and election rather than appointment of the state insurance commissioner.

``The atmosphere has changed enormously in the last year,`` Robert Creamer, executive director of Illinois Public Action, said at a press conference Monday. ``People are beginning to realize that the claims of the industry are simply bogus.``

Auto insurers have acknowledged that premiums are too high, especially in big cities, but they have blamed the skyrocketing costs they must pay to satisfy claims. They cite a study by A.M. Best Co., which gathers insurance data, showing that the business posted a $644 million loss in 1987.

In its study, Illinois Public Action said average auto insurance rates nationwide rose almost 76 percent since 1982, 44 percent faster than medical care costs and three times faster than auto repair costs. The group also said the number of auto accidents in Cook County dropped 35 percent in the last decade, and the median jury verdict in accident cases fell 46 percent.

Insurance industry spokesmen said the group`s numbers don`t tell the whole story. ``From an insurance-cost standpoint, the figures are

meaningless,`` said William Sirola, regional manager in Chicago for the Insurance Information Institute, an industry trade group.

For example, Sirola said the numbers don`t include auto theft rates, the value of automobiles insured or the cost of legal settlements. ``These are interesting reference points, but no one could make anything conclusive of them,`` he said.

Creamer said the group plans to issue a study in the next few weeks showing that average auto insurance premiums in Illinois are ``much higher``

than indicated by a Best study. That report, the latest available, said Illinois ranked 23d in average premiums in 1986.

But Fred Gassert, a spokesman for the Illinois Insurance Information Service trade group, said average rates in the state have fallen in the last two years. ``The national figures don`t apply to Illinois,`` he said.